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Friday, March 29, 2024

10Y Treasury Yields Just Did Something Every Bond Bear Was Waiting For

Courtesy of ZeroHedge. View original post here.

10Y Treasury yields just crossed 2017’s Maginot Line of 2.40% – the highest in six months…

Following Jeff Gundlach’s bearish bond perspective, and the signals from the commodity/reflation markets…



 

Citi is warning that 2.39-2.40% is HUUUUUGE on the US 10 year yield

A break of this resistance (close) would strongly suggest a move to re-test the trend highs at 2.63-2.64%. This follows a positive outside month in September throughout the curve (2’s, 5’s and 10’s) for the first time since May 2013.

Levels under threat are

  • 2.39%: July high; 61.8% pullback of March-Sept fall in yields; top of downward sloping channel
  • 2.40%: October high

A close above this range would target a re-test of the March 2017/ December 2016 highs at 2.63% and 2.64% respectively.

The only thing potentially holding back this next leg higher is the record speculative short positioning in Treasury futures… which additionally saw a massive short addition last week…

Notably this sell-off has been accompanied by a significant steepening of the yield curve (from 10 years flats)…

Ian Lyngen at BMO Capital Markets called curve steepening “the new dip-to-buy,” with flattening looking like “the path of least resistance.”

“I still favor a curve flattener,” Justin Lederer, an interest-rate strategist at Cantor Fitzgerald said. “Short-term rates are creeping higher from the Fed, and the long end is held in check with inflation running at low levels.”

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